Seeds of recovery

Friday

Mar 6, 2009 at 12:01 AM

Is it possible we could grow our way out of this depressed housing market?

Is it possible we could grow our way out of this depressed housing market?

That's what Jeffrey Michael thinks. He's director of University of the Pacific's Business Forecasting Center, and this week he made the case that the ever-increasing population of San Joaquin County will ignite another building spree. Eventually.

Tuesday, about the same time Michael was making his forecast at a real estate forum at Pacific, the chief economist of the California Association of Realtors was giving a largely upbeat real estate forecast to real estate agents in Sacramento.

"In Sacramento County, we're through 80 percent of the subprime resets," CAR's Leslie Appleton-Young said. She believes Sacramento will be among the nation's first housing markets to perk up.

Michael made a similar prediction for San Joaquin County, saying excess housing in this foreclosure period will be bought up next year. That coupled with a rising population will push demand to at least 5,300 new homes a year.

That should be good news to builders, who have seen single-family home construction fall from about 6,500 homes in 2004 to a projected 800 this year. The construction slowdown likely will get worse before it gets better, with only about 500 homes expected to be built in San Joaquin County in 2010.

Over the next 20 years, San Joaquin County's population will increase by about 460,000, to 1.2 million. A 62 percent increase in population means more homes will be needed. Lots more.

Waning subprime resets - adjustable mortgage interest rates that increase, pushing the monthly payment higher - in this county are a sign that "we've gone further through the cycle" than other regions, Michael said, echoing Appleton-Young.

"If we can get the jobs market to settle down a little, conditions will be in place to find a bottom in the housing market," he said.

The job market is going to have to settle down more than a little. The county's jobless rate in December was 13 percent, and it didn't get any better in January. The state Employment Development Department said Thursday that in January, the county's jobless rate jumped to 15.1 percent.

Still, there seems to be signs that there's light at the end of the tunnel and it's not just a train coming our way. For Michael and Appleton-Young to see a bit of light is better than much of the economic news of late.